Terms of Reference – Remuneration Committee

The Committee:

  • Is constituted in a way that enables it to exercise competent and independent judgment on remuneration policies and practices and the incentives created for managing risk, capital and liquidity;
  • Has a chairman and members that are on the Society’s Board but who do not perform any executive function in the Society; and
  • Takes into account the long-term interests of members, depositors and other stakeholders in the Society.

Composition:

  • The Committee comprises all Non Executive Directors (and may include the Society’s Chairman provided that the Chairman was considered independent on appointment as Chairman).
  • The Chief Executive can by invitation be in attendance at the Committee meetings to enable the Committee to consult on their proposals relating to other Executive Directors and non Board members of the Senior Management Team.
  • The Board will appoint the Committee Chairman who shall be an independent Non Executive director. In the absence of the Committee Chairman the remaining members present shall elect one of themselves to chair the meeting who would qualify under these terms of reference to be appointed to that position by the Board. The Chairman of the Board shall not be Chairman of the Committee.

Quorum:

  • The quorum necessary for the transaction of business shall be three. A duly convened meeting of the Committee at which a quorum is present shall be competent to exercise all or any of the authorities, powers and discretions vested in or exercisable by the Committee.

Duties of the Committee:

  • The Committee is responsible, together with the Society’s Board, for ensuring that the Society’s Remuneration Policy complies with the FCA/PRA Remuneration Code and any other relevant guidance.
  • The Committee is responsible for the implementation of the Society’s Remuneration Policy.
  • The Committee determines the remuneration of the Executive Directors and the Chairman of the Board.
  • The Committee recommends and monitors the level and structure of remuneration for non Board members of the Senior Management Team (including the Society’s Secretary) and reviews the general level of remuneration for all other staff.
  • The Committee approves the design of, and determine targets for, any performance related pay schemes operated by the Society and approves the total annual payments made under such schemes.
  • The Committee determines the policy for, and scope of, pension arrangements for each Executive Director and non Board members of the Senior Management Team (including the Society’s Secretary).
  • The Committee ensures that contractual terms on termination, and any payments made, are fair to the individual, and the Society, that failure is not rewarded and that the duty to mitigate loss is fully recognised.
  • The Committee oversees any major changes in employee benefits structures throughout the Society.
  • The Committee agrees the policy for authorising claims for expenses from the Directors.
  • The remuneration of the Non Executive Directors other than the Chairman is determined annually by the Executive Directors and the Chairman of the Board in accordance with the Society’s Rules. Rule 19 (1) states that “The annual remuneration of the Directors as members of the Board (exclusive of any remuneration paid in respect of executive duties) shall be paid at a rate to be determined by the Board from time to time but not exceeding five pence per one hundred pounds of total assets of the Society as at the first day of the Financial Year in which payment is made. This remuneration shall be divisible among them by a majority decision and, in default of agreement, in equal shares.”
  • No Director or other member of the Senior Management Team is involved in any decision as to their own remuneration.

Meetings:

  • Meetings are held at least annually to determine appropriate levels of remuneration for all members of the Senior Management Team (including Executive Directors) for the twelve months following the start of the Society’s financial year.
  • Unless otherwise agreed, notice of each meeting confirming the venue, time and date together with an agenda of items to be discussed, shall be forwarded to each member of the Committee and any other person required to attend, no later than five working days before the date of the meeting. Supporting papers shall be sent to Committee members and to other attendees, as appropriate, at the same time.
  • Meetings are also held at any time it is felt necessary to review the remuneration package of an Executive Director or a member of the Senior Management Team or for determining the appropriate remuneration package for a new Executive Director or a new member of the Senior Management Team.
  • Draft minutes of Committee meetings will be circulated promptly to all members of the Committee. Once approved, minutes will be circulated to all other members of the Board as Private minutes unless it would be inappropriate to do so.

General policy:

  • The Committee will monitor the remuneration packages of executives within the building society industry specifically and within the financial services sector and broad market-place generally.
  • The Committee will be responsible for considering all elements of the Senior Management Team’s remuneration such that the Society attracts and retains Executive Directors and Senior Managers of sufficient calibre for its continued well-being.
  • The Committee will ensure that members of the Senior Management Team (including Executive Directors) are motivated and fairly rewarded for their individual contributions to the Society’s overall performance and in accordance with the principles enunciated under the Society’s Treating Customers Fairly policy.
  • The Committee will ensure that the UK Corporate Governance Code is taken into account having regard to the relevant guidance issued by the BSA.
  • The Committee will take into account as appropriate the Financial Reporting Council’s “Guidance on Board Effectiveness”.
  • The Committee will ensure that if the Society’s remuneration policy leads to tensions between the ability of the Society to meet the requirements and standards under the regulatory system and the personal advantage of those who act for it, these tensions, if they exist, should be appropriately managed.
  • The Committee will ensure that it has access to sufficient resources in order to carry out its duties and is authorised by the Board to obtain, at the Society’s expense, outside legal or other professional advice on any matters within its terms of reference.

Reporting responsibilities:

  • The Committee Chairman will report to the Board on its proceedings after each meeting on all matters within its duties and responsibilities.
  • The Committee will make whatever recommendations to the Board it deems appropriate on any area within its remit where action or improvement is needed.
  • The Committee will produce a report of the Society’s remuneration policy and practices to be included in the Society’s annual report and ensure each year that it is put to members for approval at the AGM.

Review:

  • The Committee will ensure that it reviews at least annually the Terms of Reference of the Committee and the Society’s Remuneration Policy together with the Committee’s own effectiveness to include scope and adequacy and recommend any necessary changes to the Society’s Board.

REVIEWED AND APPROVED BY THE REMUNERATION COMMITTEE

OCTOBER 2014